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Splitting Your Budget Between SEO & PPC [With Examples]

"Should we invest in SEO or in PPC?", "What percentage more...

Splitting Your Budget Between SEO & PPC [With Examples]

“Should we invest in SEO or in PPC?”, “What percentage of our budget should we set aside for SEO?”, “Are we investing sufficiently in organic compared to paid search?” – these are questions most digital marketing managers ask at one point or another. Here’s how advertisers can find the right split between investment in organic and paid search.

Example 1: Established business with steady traffic

Regular businessMost medium and large businesses will fall under this category. Here, the primary objective is to build or sustain growth over the long term.

When growth is important, the best strategy is to maximise reach, which can be achieved by targeting the largest possible audience via both paid and organic search.

Identifying paid search spend in this situation is easy. It is the amount that Google recommends in the AdWords campaign tab or the spend needed to secure 100% impression share on all profitable search campaigns.

The rest of the search marketing budget should be invested in improving organic visibility.

Now, if the amount of budget that’s left for SEO isn’t quite enough, then the correct approach is to re-evaluate the budget. If the paid search campaigns are profitable, there is really no reason why a business shouldn’t continue investing in them to the maximum possible level while maintaining profitability.

Keeping in mind, then, that organic search drives 50-75% of total search traffic, the budget apportioned for that activity should be equal to or 1.5 times as much as the paid search budget multiplied by the comparative profitability of an organic search click.

Example 2: Start-up with a brand new website

EntrepreneurHere the primary objective tends to be building up a large customer base, becoming profitable, or both, as quickly as possible.

When speed of returns is important, the only reliable option is advertising.

Ethical search engine optimisation can take long – 6-12 months for a brand new website to deliver significant, reliable results – we’re not talking about just an initial blip accompanying the new site launch PR, which then fades away, but a steady growth in organic presence and referred traffic.

For the first 3-6 months, 100% of a start-ups budget should typically be allocated to paid search. Profits or returns from paid search activity can then be accumulated and invested in organic search marketing. A graph of the paid and organic search marketing spend should look like this:

Graph of SEO vs PPC investment for start-ups

Example 3: Established business with mostly branded traffic

SME businessThe situation here will be quite similar to the first example. The primary objective will be to grow traffic over the long term and promote the brand to current and new audiences. One additional goal here will often be to build and protect the brand.

When driving growth by maximising reach, the strategy should once again be to target the largest possible audience via both paid and organic search.

Here too, the split between organic search and paid search should reflect the 50-75% share of organic search compared to total search activity. The only difference here will be that instead of simply multiplying the organic search share by the comparative profitability of an organic search click, businesses should also consider the value of brand impressions gained through an organic search presence – which can make organic clicks as valuable as ad clicks, even if they don’t convert into sales as well.

When building and protecting the brand, the strategy should be to ensure that the brand gets prime visibility in search results and to manage the brand’s reputation, especially on the first page of organic search results.

An additional budget needs to therefore be allocated to bidding on the brand and any associated brand terms. This is especially important in industries where competition is stiff and competitors as well as suppliers and distributors are likely to bid on the brand, thereby pushing the brand owner’s presence lower in the search results.

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